Based on who I’ve talked to, here is the latest reading of what is believed to be likely to happen Sunday. It pretty much makes sense – on Monday, we can see how it stacks to reality.

1. Markets went hog wild Friday and one source tells me it’s because the markets are pricing in a Manuel Rosales victory over Hugo Chavez. Internal polls put Rosales five to 10 points ahead of Chavez. None show him behind and there is very high optimism in the Rosales camp. (I remember the high optimism pre-recall referendum so I am cautious about that. But they are insistent that they have the votes to win.)

2. Smartmatic in under probe for giving bribes by CIFUS, the federal agency investigating them, and the DOJ for tax-evasion. The news is having an explosive effect in Caracas, putting lots of pressure and scrutiny on those guys and on the observers.

3. The U.S. embassy’s warning to U.S. expats to stockpile food, water and medicine for the expected weekend turmoil somehow got out to Venezuelans who are also now panic-shopping in some parts. The government has now warned them that there is to be “no nervous shopping.”

4. Civil society groups will be flooding the place and every polling station looking for irregularities. Lots of them are lawyers. People in general are on the lookout for and expecting, fraud. The rumors are flying wildly. Sumate is taking a very low-key but critical role in the monitoring – they’ve already pointed out several avenues for trouble and are well prepared for shenanigans.

5. The international electoral observers, holed up in Caracas hotels until showtime, are getting very disgusted with the chavistas who are propagandizing them to death with leaflets, seminars and stuff they can tell is meant to influence their views. Most are going in with an honest objectivity so they are already getting suspicious by this chavista love campaign. These include the OAS, the EU, the Spaniards from some university and the Carterites.

6. News media people are flooding Caracas. Observers say some of the foreign reporters are incorrigibly in love with Chavez but a lot of them are finding that they are changing their minds. The one radio network guy, for instance, came to Caracas all set to admire Chavez for his concern for the “poor” and just a few days walking around there has started to make him change his mind. There are a couple of others who are starting to change their minds, but an observer adds that some are incorrigible leftists.

7. The military is not with Chavez. The escape of Carlos Ortega, Venezuela’s most dangerous political prisoner, passing through 14 military checkpoints before he escape a supermax prison, signals something is up. The two top military chavistas, Raul Baduel and some other guy, are heavily U.S.-educated, both are Fort Benning men. They are congenitally friendly with the US. The Rosales camp supposedly does not believe the military, which prides itself on its professionalism, will enforce a chavista victory. The slum dwellers who make up Chavez’s alternative militia army to fend off a yanqui invasion, don’t know what they are doing either, they tend to use their guns on each other.

8. The Marachuchos (these are the Rosales political machine from Maracaibo on the western side of Venezuela) are notoriously tough politically and have a powerfully disciplined political machine. They were the only ones who could hold off a total chavista takeover in their Maracaibo state in previous elections. Now, they are taking the same politically tough techniques nationally. Their strategy has been very smart and hardnosed. They won’t be easy to fool if Chavez pulls shenanigans. They are looking for and expecting everything. They are sly and quick and wily too.

9. Likely scenario, according to the Maracuchos: Chavez will cheat on this election but won’t be able to hold onto his victory for more than a few months. A secondary factor that will help push Chavez out is the coming collapse of the Venezuelan economy. Oil prices are down and production is down. Chavez is begging for oil production cuts to keep prices high and pressure off him to pump oil. A huge new oilworker strike is brewing in the east, which could take down 25% of Vz’s production. Meanwhile, Chavez has pumped $9 billion into the monetary system in the last 30 days, making devaluation inevitable in three or four months. Capital flight going full blast out of Caracas right now. Market sources say it’s 30% collapse coming, but other bankers in Caracas don’t think the government will let it go down that far, more like 15%.

Stay tuned.

Venezuela Today, at the top of its page, has another projection of what is likely to happen Sunday – it looks like an impeccable source writing it, and BBO investment bank has a first-rate multi-dimensional reading on the situation, too.